Food and drink price inflation in the foodservice sector unexpectedly rose again in April, after price increases had begun to slow, with inflation in March dipping below 20% for the first time since mid-2022.
The latest CGA Prestige Foodservice Price Index says year-on-year inflation rose to 21.4% driven by pressure in some categories. Food inflation is still expected to ease in the coming months.
The rise was driven by pressure in the vegetables, fish and sugar, jams & syrups categories, each of which saw prices increase by between 3% and 4% month-on-month. Potatoes, in which the UK is more than 90% self-sufficient, suffered a particularly sharp increase during April, in the wake of rising production costs, labour shortages, lower storage crops and significant short-supply in many parts of Europe. This supply/demand imbalance looks set to continue for much of the rest of 2023.
More optimistically, conditions within three major upstream influencers on the price of food—oil, exchange rates and commodity markets—are now relatively stable compared to the volatility of 2022, with falls in oil expected in the coming months.
Prestige Purchasing CEO Shaun Allen said, “In spite of these April increases we expect to see inflation ease slowly over the course of 2023 as commodity pricing and prior year impacts kick in. The major question that remains is the speed of that decline as energy, labour costs and climate change remain significant constraints on progress with inflation reduction.”
James Ashurst, client director at CGA by NIQ, said, “After welcome signs respite over the first quarter of the year, it was disappointing to see inflation surge above 20% again in April. On top of soaring costs in other key inputs and the impact of the cost of living crisis on consumers, it leaves hospitality businesses facing some seismic challenges. The long-term outlook for this sector remains good, but trading remains exceptionally difficult.”